Looking at my first investment property in NYC: any advice?
Looking at my first investment property in New York City. Looking at a multifamily (3-unit) property in Brooklyn (Bushwick). From my understanding the new rent laws passed do not effect it, only for 5 units+. Any advice for how to evaluate the property? It was on the market, but is now off around it's current price. I've asked for current rents as they use projected in the setup and will model out the expenses because they say it's 15% of gross which seems way too low (was thinking it should be in the 30-50% range).
Plan on walking the area during the weekend to see how it is/are people out walking etc, also have looked and it's a 5ish minute walk to transportation (3 blocks) with multiple stations so that seems good. Anything else I need to evaluate? I understand it's probably priced high and there's a reason it was taken off the market. Going to take it slow, line up financing for it, but want to at least learn if I don't purchase this specific property.
Ask for the trailing 12 expenses (at a minimum). If you can get it, ask for the trailing 3 years. Ask for the current rent roll and expiration dates. Expenses could be 30%, but they could also be 50% if it’s a 50 plus year old property. Getting trailing expenses will tell a better picture. Also ask if any capex was spent in the last three years, if so, what and how much? This last item might be something that comes out in due diligence. You could also speak with a property manager in the area who can help you create a budget and tell you if your property is operating in line with market (they can provide rent and expense comps). The property management firm also may have someone who can walk the property with you and let you know the boiler need some to be replaced, roof needs to be replaced, etc., so you can budget for it. As it’s a 3 unit, you could ask a home inspector to do a free walk through and give them the business if you buy the property.
Hey buddy NYC local here.
It is actually very interesting to see you are buying because one of my dads close friends is selling a building in Harlem within the next 6 months. NYC real estate market is in a very precarious state at the moment. My building as well as many others are increasing the flip tax making it harder for people like you to do what you do. I would actually wait a year and a half before buying. There is a lot of instability. Billionaires like Carl Icahn leaving as well as the Amazon debacle frighten me in terms of NYC's future economic prospects and neighborhood changes. You gotta be careful about the expenses because DOB will strike down like fire and hell. Prices are definitely dropping at the moment in reaction to many events listed above but that is at a much higher level the median home value I expect to deteriorate. Best of luck.